EDITORIAL: Gas prices: Not all that simple

Published: Tuesday, April 29, 2014 at 05:39 PM.

The cost of gassing up your car or truck is climbing again. Gasoline prices have been increasing for the past month, with a brief slowdown around Easter, and the Florida average for a gallon of regular unleaded is about a quarter shy of the $4 mark.
For a lot of folks, it’s time to demand more drilling.
“My opinion is if we freed up the federal lands for drilling, prices would go down,” the owner of a shuttle service covering Northwest Florida, from Pensacola to Panama City Beach, said the other day. “And we need more refineries. It’s as simple as that.”
Well, ahem, it’s not quite that simple.
An Associated Press analysis of 36 years’ worth of gas prices and U.S. oil production, released in 2012, concluded that more oil production in the United States “does not mean consistently lower prices at the pump.” In fact, the results often were the opposite of what you would expect. When U.S. drilling is scaled back, prices at the pump sometimes fall. When drilling is ramped up, prices sometimes rise. Often, the study concluded, it’s “a case of drilling more and paying much more.”
That appears to be happening now. The United States lately has experienced a drilling boom — and prices are nudging $4 per gallon anyway.
The reason? Oil is a global commodity. U.S. drilling has only a tiny impact on supply and prices.
What has a greater impact, at least within America’s borders, are refineries cutting back their operations for maintenance — as they do early each year — which reduces the amount of gasoline they produce. Prices also rise as the refineries start churning out their summer fuel blends.
Global tensions jack up gas prices, too, because civil unrest can disrupt energy commerce.
So if you want gas prices to drop, pull for peace in the Middle East and calmer rhetoric in Ukraine; urge the federal government to scrap its requirements for different blends of gasoline at different times of the year; and keep the refineries humming.

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The cost of gassing up your car or truck is climbing again. Gasoline prices have been increasing for the past month, with a brief slowdown around Easter, and the Florida average for a gallon of regular unleaded is about a quarter shy of the $4 mark.
For a lot of folks, it’s time to demand more drilling.
“My opinion is if we freed up the federal lands for drilling, prices would go down,” the owner of a shuttle service covering Northwest Florida, from Pensacola to Panama City Beach, said the other day. “And we need more refineries. It’s as simple as that.”
Well, ahem, it’s not quite that simple.
An Associated Press analysis of 36 years’ worth of gas prices and U.S. oil production, released in 2012, concluded that more oil production in the United States “does not mean consistently lower prices at the pump.” In fact, the results often were the opposite of what you would expect. When U.S. drilling is scaled back, prices at the pump sometimes fall. When drilling is ramped up, prices sometimes rise. Often, the study concluded, it’s “a case of drilling more and paying much more.”
That appears to be happening now. The United States lately has experienced a drilling boom — and prices are nudging $4 per gallon anyway.
The reason? Oil is a global commodity. U.S. drilling has only a tiny impact on supply and prices.
What has a greater impact, at least within America’s borders, are refineries cutting back their operations for maintenance — as they do early each year — which reduces the amount of gasoline they produce. Prices also rise as the refineries start churning out their summer fuel blends.
Global tensions jack up gas prices, too, because civil unrest can disrupt energy commerce.
So if you want gas prices to drop, pull for peace in the Middle East and calmer rhetoric in Ukraine; urge the federal government to scrap its requirements for different blends of gasoline at different times of the year; and keep the refineries humming.